Excess North American oil supply pushes global prices downward

Posted 28 May 2014

As per reports from The US Energy Information Administration, the price for Brent crude (the global benchmark) is expected to come down to US $ 104 in 2014. For West Texas Intermediate (The US Benchmark), the prices should be around US $ 96 per barrel. The prices of West Texas Intermediate are less than Brent crude because of increase in the US production.
- Jess Potts

According to the IMF, the global crude oil prices have been considerably lower due to increase in supply of oil from North America. The oil production in the US is expected to surpass 9 million barrels per day in the near future, and the trend is expected to continue for some time. In fact, almost all the spike in international oil production is from the US and Canada. As a result, the excess production has found its way into the international market, thus slashing global prices.

As per reports from The US Energy Information Administration, the price for Brent crude (the global benchmark) is expected to come down to US $ 104 in 2014. For West Texas Intermediate (The US Benchmark), the prices should be around US $ 96 per barrel. The prices of West Texas Intermediate are less than Brent crude because of increase in the US production.

The EIA estimates the US oil production to be around 8.4 million bpd in 2014 (a 14 % jump since last year) and move up to 9.1 million bpd in 2015. Due to the boom in shale, the domestic crude oil production should inch towards 13 million bpd. Based on these trends, the IMF forecasts the prices to fall by 6% in 2015. In the long run, the US oil imports would show a steady decline and become almost zero by 2040.

There is a buzz in the oil market: Look towards North America for your oil and gas requirements, instead of The Gulf, because the US has replaced Saudi Arabia as the biggest supplier of oil in the world.

This energy boom has enabled the US to pursue an aggressive foreign policy. The US government has leveraged the new sources of energy to curb Iran’s oil sales, which has been instrumental in forcing Teheran to the negotiating table. Thus, the North American oil boom is expected to have an effect on the global geopolitics in the coming years.